March 30

8 Ways Divorce Financial Planning Can Help You Avoid Costly Mistakes


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divorce advice, divorce after 50, divorce blog, divorce costs, divorce financial planning


stressed woman looking at bills while sitting in the kitchen needs divorce financial planning

When you’re going through a divorce, hiring a divorce financial planner seems like one more expense you honestly don’t need. If you’re like most people, you probably assume that you have enough common sense to figure out your finances yourself.  With your divorce expenses mounting, divorce financial planning seems like a luxury you can do without.

But a divorce financial planner does way more than just help you balance your checkbook or figure out child support.  S/he adds a depth of financial understanding and support that can make an enormous difference in your divorce.

A divorce financial professional can help you from making costly financial mistakes in your divorce. S/he can help you from forgetting about taxes, or overlooking an important financial issues. A divorce financial planner can start you on the road toward a sound financial future, right from the beginning of your divorce. (Yes! It’s possible!)

Unfortunately, most people don’t even think of hiring a divorce financial planner until well after their divorce is already over. By then, the die has already been cast.

If you, or someone you know, is facing a divorce, getting proper financial advice is critical. Here are 8 reasons why hiring a divorce financial planner can be the best decision you ever made.

How Divorce Financial Planning Can Help You

  1. Harried woman holding a large stack of divorce financial documents.Divorce Financial Planners Can Help You Gather and Organize Your Important Financial Information.

    Divorce is a document driven process. Yet, unless you have been through a divorce before, you probably have no idea which documents you need to collect. You’re also probably at a loss as to what to do with those documents once you have them.

 A divorce financial planner can tell you which documents you will need in your divorce. S/he can save you hours of wasted effort collecting unnecessary or irrelevant information. More importantly, s/he can help you organize the documents and information you collect, so that you can easily use them in your divorce. (You can have all the information in the world, but if it’s not organized properly, it won’t help you much.)

  1. Divorce Financial Planners Can Help You Make Realistic Financial Goals.

    The biggest mistake most people make in divorce is not taking the time to make financial goals. If you want the best chance at financially surviving your divorce, you need to make financial goals as early as possible. At the same time, your goals can not be “pie in the sky.” If you’ve been living on credit cards for years, having a goal to be debt free on the day of your divorce might not be realistic.

 A divorce financial adviser can help you figure out what matters to you. S/he can help you set your financial targets right from the beginning of your divorce. That way, as you go through your divorce process, you will know what you need, and what are trying to achieve.

  1. Word cloud of retirement account words that a divorce financial planner can help you evaluate.Divorce Financial Planners Can Help You Understand Your Current Situation.

    If you were the spouse who took care of the money in your marriage, you may think you understand the current state of your finances. Maybe you do. But, if you’re like most people, you probably just have a “general idea” of your financial picture. You may know what you and your spouse have, and what you owe. (If you were not the spouse who handled the money, though, you may be clueless!) Either way, the devil is in the details.

 You may know that you have a retirement plan, but can you identify which portion of that retirement plan is marital and which portion is not? If your spouse has a high-level job with a big company, do you know what all of his/her benefits are, and how the benefit plan really works? If you and/or your spouse own a company, how do you figure out what it’s worth? Going through your divorce without learning the answers to these questions can be disastrous.

  1. Divorce Financial Planners Can Help You Find Hidden Assets.

    While most divorce financial professionals are not necessarily forensic accountants, they have enough financial knowledge to know when something smells fishy. Lawyers don’t.

 Although most people think that their attorney will be able to spot any financial irregularities in their divorce, that’s not always true. Unless your lawyer has special financial knowledge s/he could easily miss the signs that your spouse is hiding money. That’s especially true if your spouse is financially savvy, or if your financial situation is complicated.

  1. Silhouette of a head with question marks coming out of the top.Divorce Financial Planners Can Help You Brainstorm Settlement Options.

    You can’t create realistic settlement proposals if you don’t even know what’s possible. For example, it’s impossible to make a post-divorce budget if you can’t properly calculate how much child support or spousal support you are going to have to pay, or will receive. While compiling financial reports may be above your skill level, that is exactly why you need a professional

A qualified financial professional will have the knowledge and the tools to help you analyze your situation.  S/he can help you crunch numbers and come up with creative settlement options that will be in your family’s best interest. Plus, an experienced professional can advise you about settlement options you didn’t know were possible.

  1. Divorce Financial Planners Can Help You Evaluate Your Spouse’s Settlement Proposal.

    Getting a divorce is not as simple as saying, “I’ll keep the house and you keep the retirement account.”  Every settlement proposal has different tax implications. Every proposal will have a different impact on your long-term financial security. If you want to make the smartest financial decisions in your divorce, you need to be able to completely evaluate every settlement proposal. 

A good divorce financial planner will help you dig into your spouse’s settlement proposal. S/he can show you the long-term effect each proposal will have on your financial situation. S/he will be able to help you understand the numbers so you know what’s really being offered. You won’t be deciding whether to accept or reject a proposal based on your “gut feeling.” Instead, you will be analyzing each proposal from a base of sound financial knowledge. 

  1. Scared woman looking at papers on a desk that say "Tax" in big letters.Divorce Financial Planners Can Help You Understand How Taxes Will Affect Your Settlement.

    Taxes can have a huge impact on how much money actually makes it into your pocket after your divorce. Income taxes, real estate taxes, and capital gains taxes can all affect your divorce settlement. You can’t properly evaluate any settlement options until you have figured out how all of those taxes will affect you. 

Divorce financial planners can help you understand the amount of taxes you will have to pay if you are receiving spousal support, or the tax break you might get if you pay it. They can help you understand which assets are pre-tax assets and which are post-tax assets. They can also help you understand whether selling your house, or any other asset, will affect your taxes as well.

  1. Divorce Financial Planners Can Help you Make a Sound Post-Divorce Financial Plan for Yourself and Your Kids.

    Very few people are in a fabulous financial position when they are going through a divorce. Yet, you won’t be going through a divorce forever. Once your divorce is behind you, you will probably want to know what you can do to improve your financial situation over time. A divorce financial planner can give you that kind of information. 

Your divorce financial professional can run reports for you. Those reports will show you what your financial future will look like if you spend, save and invest at different rates. Having these reports can help you plan how to achieve your post-divorce financial goals. Seeing the reports before you make any financial settlement in your divorce can help you see the long-term effects that various settlement proposals may have on your financial future.

It takes a team to get through your divorce in the most effective and efficient way possible. A divorce financial planner should be a critical member of your divorce team.  S/he can also provide enormous benefits in your divorce, and keep you from making mistakes that might take years to overcome.

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  • No matter whatsoever, Divorce is one of the most financially traumatic things you can go through. Money spent on getting mad or getting even is money wasted.

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